Washington watch: What's in store for rail under Trump 2.0?

By Julie Sneider, Senior Editor

With a new, Republican-controlled Congress seated, and President Donald Trump sworn into office for another four-years, rail association leaders and industry proponents say they’re looking forward to getting to know a fresh slate of faces on Capitol Hill and in the U.S. Department of Transportation (USDOT) to advance issues of interest to the rail industry.

Among the issues that many rail industry leaders are eager to dive into this year is the groundwork that will occur in preparation for the surface transportation reauthorization legislation, as the current law — the Infrastructure Investment and Jobs Act (IIJA) — expires in 2026.

But the enthusiasm they extolled in early to mid-January turned to anxiousness and confusion for a couple of days in late January, after the Trump administration’s Office of Management and Budget announced in a memorandum a temporary freeze on all federal grants, loans and other assistance. The action left railroad leaders and association heads scrambling to figure out how the freeze would impact federal grants and loans announced by the Federal Railroad Administration since the passage of the IIJA.

Before the OMB’s order could take effect Jan. 28, a federal judge temporarily halted the funding freeze, and by Jan. 29 the Trump administration rescinded the memo altogether.

Aside from that brief period of turmoil, several rail association and industry leaders say they are looking forward to some of the changes they hope the Trump administration will bring to the U.S. Department of Transportation. In particular, industry leaders commended Trump’s nominations of Sean Duffy as U.S. transportation secretary and former railroad executive David Fink as administrator of the Federal Railroad Administration (FRA). The U.S. Senate confirmed Duffy’s nomination and he was sworn in as transportation secretary on Jan. 28; Fink’s nomination was pending at press time.

Although Duffy, a former Republican congressman from Wisconsin and Fox Business host, did not serve on the House Transportation and Infrastructure Committee while in Congress, he did serve on the powerful House Ways and Means Committee that shapes fiscal legislation. That experience will be an advantage as lawmakers begin preparation for surface transportation reauthorization, rail industry leaders say.

What Duffy lacks in rail expertise, FRA administrator-designee Fink will make up for it at FRA, rail industry officials believe. As the former CEO of the Pan Am Railway — a 1,200-mile New England regional that CSX acquired in June 2022 — Fink is a “rail guy,” they say.

The Association of American Railroads (AAR) is looking forward to the new era in USDOT leadership, says Adrian Arnakis, the AAR’s senior vice president of government affairs. It’s no secret that the USDOT under Transportation Secretary Pete Buttigieg and the FRA under administrator Amit Bose were “difficult” for the AAR to deal with, she adds.

“I think we’re hopeful that we’re going to get a fresh start, restart those relationships [with USDOT] and make some headway,” Arnakis says.

As a congressman, Duffy was known to be open to hearing all sides on issues and making decisions based on facts and data, she says. AAR leaders hope he and Fink will be open to addressing a number of the association’s concerns, such as the slow pace at which the FRA acts on requests for waivers from certain regulations.

In November 2024, the AAR filed litigation in courts across the country challenging the FRA’s failure to act on a number of overdue waiver requests made by BNSF Railway Co., CSX and Union Pacific Railroad to implement certain operating practices and technologies to improve safety and efficiency. Specifically, the AAR asked federal courts to find that the FRA violated its own regulations by failing to approve or deny waiver requests within a certain timeframe.

Since the lawsuit was filed, the FRA granted some of the waiver requests, but didn’t act on all of them, according to the AAR. Association leaders are optimistic that Fink will understand the real-world consequences of regulating railroads, Arnakis explains.

“A lot of the frustration we’ve had with [the now-former FRA leadership] is that they don’t seem to have a deep railroad background and sometimes don’t understand the full implications of their actions — or inactions,” she adds.

Seeking a fresh take on crew size

But the AAR asserts the rule is unnecessary for a number of reasons, such as that Class Is typically have at least two crew members — a certified locomotive engineer and certified conductor — onboard; crew size should be left to the railroads and labor unions to negotiate; and no data has shown that two-person crews are safer than one-person crews.

Moreover, a two-person mandate could stifle the adoption of new technology designed to make trains safer, AAR President and CEO Ian Jefferies told the House Subcommittee on Railroads, Pipelines and Hazardous Materials at a Jan. 23 hearing.

“Railroads aren’t seeking the ability to impose one-person crews haphazardly or unilaterally,” said Jefferies, according to his written testimony. “Rather, they seek flexibility to continue to work with rail labor under the existing collective bargaining framework — as they have for decades — to identify when conditions allow a reduction in the number of crewmembers without jeopardizing safety.”

Convincing the FRA to reverse course on the train-crew size rule may take more than a change in FRA administrators, however. At the subcommittee’s Jan. 23 hearing, Ranking Member Dina Titus (D-N.V.) and member Troy Nehls (R-Texas), who chaired the rail subcommittee last year, both said they want a two-person crew measure included in the upcoming surface transportation reauthorization bill.

Titus said she was pleased that Transportation Secretary Duffy, in his Senate confirmation hearing, indicated his support for a two-person crew mandate.

“I hope we can hold him to that, and work with the administration to get rail safety legislation and a number of safety improvements across the finish line in this Congress,” Titus said.

Nehls noted that Vice President JD Vance — who was a U.S. senator from Ohio when a Norfolk Southern Railway train derailed in East Palestine in February 2023 — introduced rail safety legislation that included a two-person crew size rule that was supported by then-former President Trump.

“As a member of this committee, I support that rule,” said Nehls. “The idea that Republicans will do whatever big business wants — and will not take into account the needs of the working man — is outdated.”

If the Jan. 23 subcommittee hearing is an indication, rail safety will remain top of mind for many lawmakers who pushed for the proposed Rail Safety Act in the aftermath of the East Palestine accident. Titus and Nehls said they’ll work to include the crew-size minimum rule, viewed as a safety issue, as part of the reauthorization.

It’s unlikely Congress will pass what will be a multiyear surface transportation funding package in 2025, a number of rail industry proponents say. Instead, it may take a series of extensions before the entire reauthorization legislation gets through Congress and to the president’s desk.

“Certainly, this Congress is going to be focused on reauthorization,” says Matt Ginsberg, a principal with the government relations firm Tai Ginsberg & Associates, whose clients include railroads and rail industry businesses. “A lot of work will get done on it this year, but it’s probably going to take a little time to get a package of that size across the finish line.”

That’s because Congress’ top priority in 2025 is expected to be a massive bill on taxes. With the Tax Cuts and Jobs Act set to expire this year, lawmakers’ attention will be focused on debate over tax cuts and related proposals, leaving little time or energy for hashing out and passing a transportation bill, Ginsberg believes.

Bipartisan support for CRISI

At the same time, Ginsberg senses there’s “a lot of excitement” around the new administration and Congress as it relates to rail. Rail industry supporters are upbeat that enthusiasm will translate into funding for federal grant programs that increased exponentially under the IIJA. Of particular interest is the Consolidated Rail Infrastructure and Safety Improvements (CRISI) program, which was started under the first Trump administration and received a substantial funding boost in the IIJA.

CRISI grants help pay for critical infrastructure projects, such as replacing worn-out track and ties, rebuilding outdated rail bridges and improving safety at grade crossings.

The IIJA called for advance appropriations of $1 billion per year over the five-year legislation, plus authorized another $1 billion per year for CRISI program funding. In September 2023, the USDOT awarded $1.44 billion in the first round of CRISI grants issued after the IIJA became law. Of that, a record $720 million helped fund 47 short line railroad projects across 36 states, according to the American Short Line and Regional Railroad Association (ASLRRA).

In October 2024, the USDOT announced $2.4 billion in CRISI funding that covered two fiscal-years-worth of appropriations. Of that amount, $1.29 billion was awarded to short lines to help fund a total of 81 projects.

Over the past eight years of the CRISI program’s existence, short lines modernized their infrastructure in ways that would have been unaffordable without those grants. The projects resulting from CRISI funding have enabled smaller railroads to better serve existing customers and attract new business, says ASLRRA President Chuck Baker.

In the early days of the program, the annual grant totals were “relatively modest” — around $100 million. But from that start, short lines have been key recipients of CRISI grants, and that funding was “supercharged” in a bipartisan way under the IIJA, according to Baker.

“It’s hard to overstate what a big deal that program has become to the industry,” he says. “There are now dozens — if not the low hundreds — of short-line projects that have been funded by CRISI. Projects like big track rehabs, expansions, sidings, locomotives, bridges, industrial parks — the kind of stuff that just couldn’t get done otherwise.”

Accordingly, short lines and regionals are looking for CRISI grants to be funded at least at levels called for in the IIJA.

And it’s not just the railroads that have benefited from CRISI — so have the contractors and suppliers that work with railroads to complete those critical infrastructure projects.

Members of the National Railroad Construction and Maintenance Association (NRC) have obtained contracts to work on infrastructure projects as a result of CRISI funding and via the Railroad Crossing Elimination (RCE) and Rebuilding American Infrastructure with Sustainability and Equity (RAISE) grant programs funded with IIJA dollars. The NRC represents nearly 400 rail suppliers and contractors, with employees in all 50 states.

“We had very robust, record-setting numbers for some of those accounts. And we’re still seeing some of those grants from IIJA trickle down, most recently from the grade crossing elimination and the RAISE programs, which directly affect my members,” says NRC President Ashley Wieland. “So, we’re really excited about those [grant programs] and we want to see those funding levels maintained if not increased.”

In his Jan. 23 testimony to the House subcommittee, NRC Chairman Joseph Daloisio III, track division manager for the Railroad Construction Co. Inc., explained how those programs — along with federal grant funding for Amtrak’s and port authorities’ infrastructure projects — have been a boon to the rail construction sector and allowed railroads to enhance safety as well as reduce the backlog of their state of good repair.

“Spending on infrastructure, especially rail infrastructure, is truly a sound investment that pays dividends to our economy, supply chain and our transportation network,” Daloisio testified. “A strong rail infrastructure is critical to the vitality of our nation’s economy.”

While federal funding for rail infrastructure will be top priorities for railroads, suppliers and contractors over the next year, so too will be certain tax issues. One example is what the ASLRRA calls a “modernization” of the short-line tax credit, commonly known as Section 45G under the Internal Revenue Service code. The provision, which has been available since 2005 and became permanent in 2020, allows a tax credit of 40 cents for each dollar short lines and regionals spend on track upgrades, bridge improvements or technology deployments, capped at $3,500 per mile.

ASLRRA’s Baker and other short line leaders are in favor of increasing that cap to $6,100, which would help account for rising construction costs and other inflationary pressures on smaller railroads’ efforts to maintain track, rail, ties and other infrastructure.

“45G has been incredibly successful and popular for short lines,” says Baker. “It has been a foundational piece of the maintenance and rehabilitation of short lines over the last two decades. The only problem with it is that the $3,500 per track mile is frozen in time. And unfortunately, inflation has not.”

On Jan. 21, U.S. Reps. Mike Kelly (R-Pa.) and Mike Thompson (D-Calif.), chair and ranking member, respectively, of the House Ways and Means Committee’s Subcommittee on Tax, introduced the Short Line Railroad Tax Credit Modernization Act. The bill would increase the cap on the tax credit. A Senate bill is expected to be introduced soon, according to the ASLRRA.

Although Baker doesn’t expect the standalone bills will pass Congress, there is a chance the policy will be included in the much larger tax bill that Congress is expected to pass later this year, he says.

Meanwhile, members of the Railway Supply Institute (RSI) — which advocates for freight- and passenger rail-car manufacturers — also support the 45G modernization effort, as well as a reintroduction of the Freight RAILCAR Act, according to Ashley Shelton, RSI’s senior director of government and public affairs.

The legislation was introduced but didn’t pass in the 116th, 117th, and 118th Congresses, and will be reintroduced in early February. In summary, the bill would provide a time-limited 10% tax credit for new freight rail cars when the buyer/taxpayer takes two existing rail cars out of service and scraps them. The new rail car should be an improvement in fuel efficiency or capacity; or refurbishing/modernizing an existing rail car to improve fuel efficiency or capacity, according to Shelton.

“The goal is to reintroduce the bill this Congress and work to include it in the upcoming tax package,” says Shelton.

To be sure, railroaders and their affiliated associations will want to talk to their senators and representatives about all the above issues and more when they gather May 7 on Capitol Hill for Railroad Day on the Hill. The annual event provides attendees a chance to talk up the industry and share their priorities with the people whose decisions shape government policies that impact their companies.

Last year, 308 attendees visited 270 congressional offices to educate lawmakers about freight rail. In addition to federal funding programs and tax policies, rail industry representatives likely will be united in advocating for issues such as maintaining existing truck-size-and-weight standards for the nation’s highways; and streamlining red tape from permitting and other federal requirements, such as under the National Environmental Policy Act, that slow progress on infrastructure construction.

Growing support for passenger rail

On the passenger side of things, Rail Passengers Association President and CEO Jim Mathews says positive momentum for Amtrak and passenger rail in general has gained steam since the first Trump administration. For Amtrak alone, the IIJA called for $22 billion in direct funding for the national intercity passenger railroad to modernize its network, including 280 Amtrak-served stations, and to replace a fleet of over 1,000 rail cars and locomotives.

Passenger rail has attracted bipartisan support in states across the country in recent years.

“There’s a lot of IIJA money in red districts,” notes Mathews.

Moreover, investment in Amtrak, commuter- and transit-rail has led to growth in the nation’s rail manufacturing supply chain. According to a 2024 report update from the Environmental Law and Policy Center, there are 750 companies in at least 39 states that manufacture components for passenger and transit rail.

Whatever Trump seeks to do on the Amtrak or passenger-rail front, he will need the support of Congress, says Mathews.

“That was true when Joe Biden came in and everyone was like, ‘Oh, Amtrak Joe’s going to fix everything.’ No, Amtrak Joe didn’t have a magic wand. He had to get Congress to go along with it,” says Mathews. “Same is going to be true for Trump, and he has a Congress that’s more supportive of passenger rail than it was eight years ago.” 

Email comments or questions to julie.sneider@tradepress.com.